Budgetary woes plague many Swedish counties

A new report shows that about half of Sweden’s county councils will post a loss this year, with widespread lay offs also expected.

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And it appears the situation will only worsen in 2009.

Ten of the country’s 21 county councils (länsting), elected bodies which are primarily charged with administering Sweden’s public healthcare system, will likely finish 2008 in the red, according to a forecast released by the Swedish Association of Local Authorities and Regions (SALAR) on Thursday.

The largest losses come in councils in Sörmland in central Sweden and Norbotten in northern Sweden, which have both announced redundancies and other cost savings measures affecting employees in order to put their finances back in order.

Sörmland, which is expected to lose 236 million kronor ($33.3 million) this year, announced emergency measures designed to save the county 300 million kronor by 2011.

The loses are largest in the health sector, which dominates the council’s activity, and thus the cost-savings plans will affect healthcare workers first.

Norbotten will lose 202 million kronor in 2008, according to SALAR’s forecast, and has given notice to 100 employees.

Västerbotten, also in northern Sweden, is expected to post losses of 109 million kronor, and plans to reduce staff size by 400 employees in the coming year.

Östergötland and Kronoberg in the south of Sweden, and Västernorrland in the north which are also expected to lose money this year.

The forecasts are based on SALAR’s quarterly reports, and don’t include allowances for the effects of the current financial crisis, which is expected to hurt the council’s ability to collect the necessary tax revenues next year.

“The condistions for collecting revue will be worse next year. It looks like the county councils might just end the year on the positive side overall, even if things may be a bit worse because of the financial crisis," said Stefan Ackerby, deputy chief economist with SALAR to the TT news agency.

"But next year looks really distressing, and is gradually getting worse.”

Prior to 2008, Sweden’s county councils had budgeted for a 2.5 billion kronor surplus for the year across all councils. According to SALAR’s forecast, the total budget surplus will be closer to 1.3 billion.

However, the larger county councils and regions, Stockholm, Västra Götaland in the west and Skåne in the south should actually finish off 2008 with better finances than expected.